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Wednesday February 21, 2018

Savvy Living

Finding Money for Long-Term Care

What resources can you refer me to for long-term care financial help? My 84-year-old mother needs assisted living or nursing home care, but we do not have a lot of money and she does not have long-term care insurance.

If your mother does not have a long-term care insurance policy there are several resources you should look into that may help pay for her care depending on her particular circumstances.

Medicaid: The first thing to understand is that Medicare (the government health insurance program for seniors 65 and older and individuals with disabilities) does not cover long-term care. This includes nursing home care, the costs of assisted living facilities and home aide services (unless your mom is receiving skilled nursing or therapy services too). Medicare only provides limited short-term coverage, which includes up to 100 days for skilled nursing or rehabilitation services after a hospital stay.

However, Medicaid (the joint federal and state program that covers health care for individuals who have very low income) as it currently stands, does cover long-term care facilities and in-home care. To be eligible for coverage, your mother must have a very low level of income. Her countable assets cannot be more than around $2,000, including investments.

Note that most people who enter a nursing home do not qualify for Medicaid at first, but pay for care out-of-pocket until they deplete their savings enough to qualify. Contact your state Medicaid office (see Medicaid.gov) for eligibility details.

Veterans aid: If your mom is a wartime veteran, or a spouse or surviving spouse of a wartime veteran, there is a benefit called "Aid and Attendance," which can help pay between $1,153 and $2,127 a month toward her long-term care.

To be eligible, your mom must need assistance with daily living activities like bathing, dressing or going to the bathroom. In addition, her yearly income must be under $13,836 as a surviving spouse, $21,531 as a single veteran or $25,525 as a married veteran (after her medical and long-term care expenses). Her assets must also be less than $80,000 excluding her home and car.

To learn more, see Benefits.VA.gov/pension or contact your regional Veterans Administration office or local veterans service organization. Call 800-827-1000 for contact information.

Life insurance: If your mom has a life insurance policy, find out if it offers an accelerated death benefit that would allow you to receive a tax-free advance to help pay for her care.

Another option to consider is selling her policy to a life settlement company. These are companies that buy life insurance policies for cash, continue to pay the premiums and collect the death benefit when she dies. Most sellers generally get four to eight times more than the policy cash surrender value.

If she owns a policy with a face value of $100,000 or more and is interested in this option, ask for quotes from several brokers or life settlement providers. To locate some, use the Life Insurance Settlement Association member directory at LISA.org.

Tax breaks: If you are helping out your mom financially, you may also be able to claim her as a dependent on your taxes. This could potentially reduce your taxable income by $4,050, which you could use for her care. To qualify, you must pay at least half of your mom's yearly expenses and her annual income must be below $4,050, excluding Social Security. For more information, see IRS Publication 501 at IRS.gov/pub/irs-pdf/p501.pdf.

If you cannot claim your mom as a dependent because her income is too high, you may still be able to get a tax break if you are paying at least half her living expenses and they exceed 7.5% of your adjusted gross income. These expenses include her medical, dental and long-term care costs. You can include your own medical expenses in calculating the total. See the IRS Publication 502 (IRS.gov/pub/irs-pdf/p502.pdf) for details.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.